The Renewables<br>Part One:</br> The New Kids In Town

The Renewables
Part One:
The New Kids In Town

March 24, 2015

This is the first in a five part series on the ascent of renewable energy sources. Over the course of the next several weeks, we will address the changing energy mix in the US as solar and wind dominate marginal additions to the powergrid, and aging fossil-fuel power retires. The evolution of energy in the US also means the map of energy production is changing. New polices from the States--some helpful, some hurtful--will impact the otherwise strong renewable buildout. In a case study, we'll take a look at Los Angeles, as that city struggles to free itself from the automobile. Finally, we'll examine the future landscape of US energy. New players in the utility business are set to rise, as the race to dominate new platforms and new technology gets underway.

The newest of California’s solar power stations form a wide arc across three hundred miles of desert, from the photovoltaic blanket that makes up the Topaz Solar Farm in San Luis Obispo County to the triptych of boiling water towers at the giant Ivanpah, the concentrating solar installation, just shy of the Nevada border.

The speed, and the ease, at which these sunshine-capturing giants have been constructed is at least as impressive as their scale. Topaz, which currently shares rank with solar powerhouse Desert Sunlight as the world’s largest PV power plant, was erected in a tightly compressed 36 months, from November of 2011 to November of 2014. An unusually short construction timeline, for utility scale power generation. Shouldering 550 megawatts (0.55 gigawatt) of capacity, the $2.5 billion dollar project is notable for another trend it represents: independence. The federal government provided no loan guarantees. Across the California desert and, more broadly, across the world, solar installations are increasingly popping up quickly, financed by capitalist seeking profits and dividend income, rather than governments.

Topaz Solar Farms

Solar and wind power suddenly appear to be a dangerous technology to incumbents in the aging business of electricity generation. As half-century old coal and nuclear plants retire – with their uneconomic creaking parts and outdated machinery -- renewables have stormed into the gap. Quietly, yet rather quickly, the various energy inputs to electricity production are changing: in the US powergrid, it’s now out with an old form of power generation that relies on burning energy, and in with a new form of power generation that relies on capturing energy.

The numbers are startling: In the last two years alone, 4.3 GW of nuclear capacity has been retired. These include the 42-year-old Vermont Yankee Power Plant outside of Brattleboro; the 39-year-old Kewaunee Station near Green Bay, Wisconsin; and the 30-year-old San Onofre plant in San Diego County, California. More nuclear retirements, in the aging US nuclear fleet, are sure to come. And if it were only US solar growth that was being called upon to “make up” for these nuclear losses, that gap would be larger. But in 2013, 1.1 GW and in 2014, 4.8 GW, of new wind capacity were also added in the US. And these were actually relatively slow years for new wind power construction.

The numbers hold true for sun-based power as well. New solar power installations in the United States added to the grid in just the past two years—a collective that includes everything from utility grade solar to rooftop solar on businesses and homes—have provided 4.75 GW of capacity (in 2013) and another 7.26 GW of capacity in 2014, according to data and estimates from BP Statistical Review and the SEIA (Solar Energy Industries Association). By comparison, a typical nuclear power plant has about 1.5 GW of capacity, and a typical coal-fired power plant about 0.5 GW of capacity. Of course, both nuclear and coal generating stations run 24/7 generating far more electricity directly from their built-capacity than a solar plant which only runs during daylight hours. The challenge for existing utility players however, many of whom bought very old nuclear and coal plants over the past 15 year at fire-sale prices hoping to scalp a profit, is that US electricity demand overall is not growing. According to the EIA (Energy Information Administration), total generation last year was only 1.5% higher than it was ten years ago.

This makes for a rather atypical set of circumstances. Though solar and wind power are not as energy-dense, nor as robustly continuous, as fossil fuel or nuclear power, they enjoy falling costs as their technologies rapidly advance. With the overall market for electricity flatlining, the young technologies of wind and solar are therefore now the preferred choice in the market for new energy infrastructure.

If demand for electricity in the United States were growing more robustly, the momentum would likely push a broader array of energy sources into the power grid: new nuclear, new coal, and new natural gas--along with wind and solar. Demand for new fossil-fuel power plants is also constrained in Europe and Japan, where slow economies and huge renewable buildouts are also underway. The popular notion of a “war on coal” a favorite theme of coal-state Republican leaders like Mitch McConnell of Kentucky, mistakes reality for a policy choice. Global demand for coal has weakened considerably. And a 40- or 50-year old coal plant is simply near the end of its design-life.